NS&I has shared an update about Premium Bonds. Customers see their Premium Bonds go into a monthly draw rather than getting an interest rate applied to their holdings.
Each monthly prize draw includes prizes ranging from £25 up to the £1million jackpot. There are always two £1million prizes in each draw.
Each £1 Bond that goes into the draw has an equal chance of being paired with a prize, with the current odds of winning at 22,000 to one. Provider NS&I has shared some figures for how many prizes were paid out over the past year.
The group paid out 71,722,056 prizes in 2025, worth a total of £4,950,616,350. There were £1million wins for savers across the country, from the North East Scotland region to Cornwall.
There were two £1million prizes each for the areas of Norwich and Cumbria. The savings scheme has proved to be very popular for younger savers.
Of the 470,660 new Premium Bonds accounts opened over the past year, a total of 77,177 accounts were for under 16s. One child saver even won one of the £1million jackpots.
You’re paying for your prizes
Sarah Coles, head of personal finance at Hargreaves Lansdown, said Premium Bonds remain a hugely popular savings product. But customers may want to think through if they are still right for them.
She said: « People are incredibly attached to their Premium Bonds, but as we move into 2026, it’s well worth taking stock of whether they’re right for you. When people win a prize on their Premium Bonds they get more than just the money, they also feel a sense of getting something for nothing, which is a powerful incentive to stay put.
« However, in reality, you’re actually paying for the prizes yourself, because your cash doesn’t earn any interest. Given the fact that the average bond holder will win nothing in the average month, it means your savings are likely to lose money after inflation. »
The latest inflation figures were at 3.6 percent for the year to October 2025, meaning if you don’t win any prizes and your holdings just stay the same, you are losing out in real terms.
Ms Coles warned that this real-terms loss compounds the longer you hold your Bonds. The savings expert said: « Families buying for children could see the real value of the bonds shrink considerably over the years.
« Given that the average account balance for new customers in 2025 is £10,674, there’s the potential to lose a significant chunk of your spending power. »
Changes to Premium Bonds
The prize fund rate for Premium Bonds has dropped several times this past year. The prize fund rate is currently 3.6 percent, as of August this year. The rate was 4 percent at the start of the year, having dropped from 4.15 percent compared to December 2024.
The rate then fell in April from 4 percent down to 3.8 percent, and from 3.8 percent down to the current 3.6 percent from the August draw. The prize rate peaked at 4.65 percent in September 2023.
However, the financing target for the current tax year set by the Government for NS&I was increased from £12billion to £12billion. This may dissuade rate setters from further cuts to the prize rate for the time being.
What alternative savings accounts to Premium Bonds are worth looking at?
If you are thinking of cashing in your Bonds, Ms Coles said now is a good time to look around for a better deal. She said: « As we head into the new year, it’s worth considering whether you’re still happy with the deal, or whether you’d prefer the certainty of a strong rate in the wider savings market.
« Check what’s available from online banks and saving platforms, where you’ll usually find competitive deals. For children with a long time horizon, it’s also essential to consider Junior ISAs as an alternative.
« Growth and income is tax free, like with Premium Bonds, but if you invest the money for five to 10 years or more they have real growth potential, and stand a much better chance of growing notably faster than inflation. »
You can deposit up to £9,000 a year into junior ISAs. An advantage of ISAs is any interest earnings or investment growth within an ISA wrapper is entirely tax-free.
